Questions - and Answers - on Data Caps

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Today we have two big announcements on the data caps and usage based billing front.  The first is that our President and CEO Gigi Sohn has sent letters to the CEOs of our nation’s largest ISPs asking some simple questions about data caps.  The second is that, in an attempt to provide some answers of our own, we are releasing the whitepaper Know Your Limits: Considering the Role of Data Caps and Usage Based Billing in Internet Access Service.

Getting information about data caps is important because today we assume that the internet can support all of the innovation that we can imagine.  That is why businesses, governments, and everyday people are working so hard (and spending so much money) to move existing services online and create new online-only services.  If the networks cannot handle all of this innovation, we need to know that now.

Data caps will also have a huge impact on the future of video competition.  Video delivered via an internet connection creates and opportunity for thousands of competing video services to blossom.  However, many existing video distribution companies also control internet access.  If abused, data caps could be used to prevent that competition from manifesting itself.

The letters are addressed to the heads of AT&T, AT&T Mobility, Comcast, Cox, Sprint, T-Mobile, Time Warner Cable, Verizon, and Verizon Wireless.  They contain a series of simple questions that are designed to help the public understand more about data caps. 

Why are they imposed?  What are they designed to achieve?  Once they are implemented, how are they evaluated?  What would ever cause them to change? 

We are asking for answers by May 25th.  Our hope is that the answers will allow us to begin to understand what is – and is not – realistic to expect from the internet going forward.

Know Your Limits is a deeper dive into the world of data caps and usage based billing.  After examining the current trends towards usage based billing, it explores both the benefits of and the justifications for usage based pricing.  Next is a more in-depth consideration of relevant economic and historical perspectives.  We also raise some concerns, both in regards to competition and to national priorities such as broadband adoption, education, employment, and innovation more generally.  Finally, Know Your Limits concludes with specific recommendations on issues of transparency, implementation, and oversight.

Data caps and usage based billing are tools and, like any tools, are not inherently productive or destructive.  What matters is how they are used.  Right now much of that use is shrouded in secrecy or obfuscation.  It is our hope that Know Your Limits today and the answers to the letters on May 25th will act as big steps towards clarifying how they are being used. 

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